CFTC Steps In to Protect Kalshi as New York Seeks $36 Billion in Prediction Market Fight

The Commodity Futures Trading Commission used its emergency powers to require KalshiEX not to deviate from its core function and principles under the Commodity Exchange Act, deepening a dispute over the regulatory status of prediction markets. Kalshi’s decision on Aug.

11 followed an Aug. 1 notice that a lawsuit by the New York Attorney General against Kalshi could create a market emergency. New York seeks at least $36 billion in damages from Kalshi, alleging that the company operates an unlicensed gambling business in the state.

The CFTC stated that the TRO New York sought would be so disruptive that it would endanger the continued operation of a federally regulated DCM.

The CFTC then directed Kalshi to ensure that Kalshi maintained an orderly market for contracts listed on the designated contract market, pursuant to Section 8a(9) of the Commodity Exchange Act. Kalshi had warned a shutdown would liquidate any open positions.